Hanna Reimers, Stefan Hoffmann, Transparent Price Labelling for Sustainable Products: A Boost for Consumers' Willingness to Buy? in:

Marketing ZFP, page 21 - 36

MAR, Volume 41 (2019), Issue 2, ISSN: 0344-1369, ISSN online: 0344-1369, https://doi.org/10.15358/0344-1369-2019-2-21

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Research Articles Hanna Reimers is Research Assistant and Doctoral Student at the Department of Marketing at Kiel University, Olshausenstraße 40, 24098 Kiel, Germany, Phone: +49/431-880-4411; Fax: +49/431-880-3349, E-mail: h.reimers@bwl.unikiel.de. Stefan Hoffmann is Professor of Marketing at the Department of Marketing at Kiel University, Olshausenstraße 40, 24098 Kiel, Germany, Phone: +49/ 431-880-4737; Fax: +49/431- 880-3349, E-mail: stefan. hoffmann@bwl.uni-kiel.de. * Corresponding author Transparent Price Labelling for Sustainable Products: A Boost for Consumers’ Willingness to Buy? By Hanna Reimers and Stefan Hoffmann Consumers often distrust products promoted as being sustainable, because they lack information about whether or not price mark-ups are warrantable. To overcome this obstacle of information asymmetry, the present paper marries the literature on sustainability labelling and price partitioning and analyzes the effectiveness of a novel product labelling approach, which is specific on both the sustainability characteristics and the price mark-up charged for such properties. A 2 (sustainability information) × 2 (price labelling scheme) × 2 (price level) between-subjects online experiment with 362 German respondents confirms that providing detailed sustainability information increases consumers’ willingness to buy. Using a transparent price labelling scheme additionally raises the effect of sustainability information if consumers’ general willingness to pay for the product exceeds the base price of the mainstream counterpart and if moderate levels of price mark-ups are used. Implications for marketing practice and future research are derived. 1. Introduction Past research confirmed that consumers are aware of the ecological and social implications associated with their own consumption choices. For example, a representative survey of the European Commission found that 94 % of the Europeans claim that protecting the environment is important to them personally. In addition, 84 % of the respondents assume that their pro-environmental behaviour can make a difference (European Commission 2017). However, studies have frequently observed a discrepancy between attitude and actual behaviour (Vermeir and Verbeke 2006). This discrepancy, often entitled as the attitude-behaviour-gap, can be partly explained by the lack of sustainability information and trust deficits (Vermeir and Verbeke 2006; Heinzle and Wüstenhagen 2012). A representative study of German consumers revealed that 63 % of the consumers complained that they lack comprehensive information to decide on sustainable products and 55 % of the consumers expressed that prices for sustainable products are too high (Vzbv 2016). Product labelling is considered a useful approach to overcome the information asymmetry, to reduce consumers’ search costs and to foster sustainable consumption behaviour. Labelling helps to guide product choices by filtering the variety of relevant information and facilitating the detection of sustainable product options. It also enables consumers to better understand the external effects of their consumption decisions and strengthens consumers’ awareness of their own responsibility (Morris 1997; Galarraga Gallastegui 2002). Studies such as Elliot and Freemann (2001), Krystallis and Chryssohoidis (2005) or De Pelsmacker et al. (2005) provide evidence that products with eco- or social labels increase consumers’ willingness to pay for sustainably produced goods to a certain extent. By willingly accepting higher prices, consumers intend to create financial incentives for companies to pursue more sustainable production approaches (de Boe 2003). Arguably, the general lack of transparency regarding pricing (or individual price components) of labelled products creates uncertainty, and hence, reduces consumers’ willingness to pay a significantly higher price for the postulated sustainability characteristics. Although consumers’ decisions for or against a sustainable product should ideally be informed by both, the sustainability in- MARKETING · ZFP · Volume 41 · 2/2019 · p. 21–36 21 formation and the related price mark-up, labelling approaches in practice as well as the labelling literature have solely focused on the role of sustainability information labelling (Banerjee and Solomon 2003; Heinzle and Wüstenhagen 2012). Remarkably, the literature of sustainable consumption has largely neglected to investigate the effects of explicit transparency about the price markup associated with the sustainability labelling. This is surprising as the literature on price partitioning demonstrates that the indication of the price of different product attributes can affect choice, purchase intention, offer evaluation, and attitude (e.g., Greenleaf et al. 2016; Abraham and Hamilton 2018). So far, the literature on sustainability labelling and price partitioning has not yet been integrated. Filling these voids, we make the following contributions to the literature. We investigate the effectiveness of an alternative labelling approach. This labelling approach specifies both the sustainability measures and the price component consumers must pay for sustainability. Such kind of price-transparent sustainability labelling could reduce information asymmetries and search costs, and thus create information security. Consequently, the new approach may increase consumers’ willingness to accept the price mark-up charged for sustainable products. However, disclosing price mark-ups also increases consumers’ awareness of the additional price component (Bertini and Wathieu 2008) they have to pay for sustainable, non-functional attributes. It may therefore create back-firing effects resulting in a lower willingness to pay. Accordingly, it is mandatory to find the acceptable level of price mark-ups. In this study, we therefore investigate to what extent a transparent price labelling scheme might complement the conventional sustainability information labelling approach to realize a stronger increase in the willingness to buy. The paper reports a 2 (sustainability information) × 2 (price labelling scheme) × 2 (price level) experimental between subjects design, which is based on the data of 362 respondents. 2. Conceptual Background and Hypothesis Development 2.1. Subjective Costs of Sustainable Consumption When consumers decide for or against sustainable products, several factors can promote the sustainable choice. Depending on the consumers’ attitudes they may value the fact that these products have an improved social or environmental impact. By using these products, they may also derive benefits regarding their own health and safety as well as the symbolism and status signalling (Vermeir and Verbeke 2006; Ottman et al. 2006). On the other hand, consumers face several barriers, such as (assumed or actual) higher monetary costs as well as subjective costs (Bezawada and Pauwels 2013; Gleim et al. 2013; Luchs et al. 2010). Consequently, the cost-benefit approach (Puri 1996; Ratchford 1982), which has been widely applied for explaining different consumption decisions (e.g. participating in consumer boycotts: Klein et al. 2004; or collaborative consumption: Lamberton and Rose 2012), is also often used as a guiding theory for explaining the consumption of sustainable products (Van Doorn and Verhoef 2015). Consumers weigh up the subjective benefits and costs derived from sustainable products in the process of purchase decision-making (Freestone and McGoldrick 2008). Whether consumers’ positive attitude towards the environment translates into real pro-environmental product decisions, depends on the consumers’ perceived subjective costs. The low-cost-hypothesis postulates that in high-cost situations individual costs may exceed the effect of environmental concerns on pro-environmental behaviour (Diekmann and Preisendörfer 2003). Accordingly, consumers only decide for sustainable options if all additional costs, including monetary and transactional costs, are rather low. In monetary terms, consumers face price mark-ups for sustainable products that are typically more expensive compared to their mainstream counterparts (Luchs et al. 2010). Further, consumers focusing on sustainability-related characteristics face a principalagent-problem, as they are typically subject to information asymmetries and rely on the property claims provided by the producer. Given that these characteristics are mostly unobservable for the consumer, they are termed as credence qualities (Darby and Karni 1973; Nadai 1999; Jahn et al. 2005). Consumers perceive a higher risk associated with such credence qualities (Mitra et al. 1999). To mitigate this risk, consumers would have to gather additional information which tends to be timeconsuming and costly (Teisl and Roe 1998). Not willing to sacrifice such resources and pay these transaction costs consumers frequently refrain from buying these product (Hoffmann and Schlicht 2013). Building on this conceptual thinking, we consider how price labelling and sustainability labelling can reduce the perception of monetary and transactional costs, and how they in turn influence consumers’ willingness to pay for sustainability-labelled products. 2.2. Willingness to Pay for Sustainability-labelled Products Numerous empirical studies have investigated the effects of eco- or social labels on consumer behaviour (for a review see Andorfer and Liebe 2012; Tully and Winer 2014). Teisl et al. (2002), for instance, showed that the usage of labels can lead to increased demand for sustainable products. A larger part of this literature is concerned with determining consumers’ willingness to buy (or to pay for) sustainably produced goods (Paetz and Guhl 2017). However, empirical findings are often conflicting. Studies confirm a higher willingness to pay for sustainable products with regard to socially and environmentally aspects of sustainability for clothing and textile products (Elliot and Freemann 2001; Aguilar and Vlosky Reimers/Hoffmann, Transparent Price Labelling for Sustainable Products 22 MARKETING · ZFP · Volume 41 · 2/2019 · p. 21–36 2007; Goswami 2008), food items (Krystallis and Chryssohoidis 2005; De Pelsmacker 2005), or green eletronics (Saphores et al. 2007; Drozdenko et. al 2011). Contrasting these findings, extant research provides empirical support for a negative influence on consumers’ WTP for different product categories (Akkucuk 2011). While consumers appreciate the labelling approach in a normative sense, its effects on real economic decisions yet appears weak at best (Vermeir and Verbeke 2006; Heinzle and Wüstenhagen 2012). Research needs to explore how to improve the labelling information to maximize its impact on actual consumption behaviour. For the first time, this paper disentangles the relevant components of this information by distinguishing sustainability information labelling and price mark-up labelling. In this way, the paper integrates the price partitioning approach in the literature of sustainable consumption. 2.3. Sustainability Information Labelling Product labelling is a popular approach to signal often poorly communicated information about the sustainability implications of a specific consumption choice and therefore to decrease consumers’ information asymmetries (Morris 1997; Jahn et al. 2005). In this way, sustainability labelling intends to reduce the subjective search costs. However, the extent to which a labelling approach helps to reduce consumers’ subjective search costs depends on the type of the attribute considered (Teisl and Roe 1998). Labelling of search attributes provides less benefits than the labelling of experience attributes or even credence attributes. For credence attributes, such as product sustainability characteristics, search costs are highest and the labelling provides the possibility to downsize the information asymmetry and the search costs. A conventional labelling approach is characterized by aggregated information and symbols, which the consumer can fluently process and easily understand (Morris 1997). Arguably, when concentrating on highly aggregated information cues, some individually relevant information might be lost. Past research has further shown that too much and incomprehensible information constitutes an obstacle for consumers (Horne 2009). Therefore, considering transparent labelling approach, it is necessary to explore to what extent sustainability information should be provided on a product. One might argue that it is important for consumers to know what kind of sustainability measures they are supporting when purchasing a product (Joerß et al. 2017). Hence, the sustainability information (e. g., ecological, social) should be explicitly specified on a potential label to reduce consumers search costs in order to create a more favourable ratio of subjective costs and benefits. H1: Consumers’ willingness to buy sustainable products at given prices is higher, if the product labelling details the sustainability characteristics than if the sustainability characteristics are not made explicit. 2.4. Interaction of Sustainability Information and Price Labelling Scheme Although extant product labels provide information about sustainability characteristics of a product, consumers remain uninformed about how much they are exactly paying for these properties. However, evidence exists that the way price information is framed may influence consumer behaviour. Presenting a price in terms of single price components (price partitioning) instead of using an all-inclusive price framing has become a common tool in practice (Greenleaf et al. 2016; Abraham and Hamilton 2018). There is some disagreement in the literature as to whether a price should be presented as a total price or in partitioned price components (Bertini and Wathieu 2008). A recent meta-analysis confirms a positive effect of partitioned pricing on choice, purchase intention, offer evaluation or attitude when individual components provide high benefits, when the total price is not presented, when price levels increase, when components are typical for the product category and when the product category is utilitarian rather than hedonic (Abraham and Hamiltons 2018). Despite of the intensive research interest in price partitioning, no study has considered consumers’ responses to partitioned prices in the context of sustainability labelling (see Tab. 1). Whereas sustainable products typically are more expensive in comparison to their mainstream counterparts (Luchs et al. 2010), the lack of price mark-up information might cause some obstacles with regard to consumers’ purchase decisions. Due to information asymmetries consumers face challenges to assess the true costs for sustainability. Knowing that, companies have financial incentives to take an advantage of this lack of knowledge. As a result, consumers’ anxiety to get defrauded by companies by paying overcharged prices for allegedly sustainable products grows. Further, consumers expect that they have to trade-off in terms of functionality (Luchs et al. 2010, 2012). With an ever increasing number of labels, consumers’ uncertainty about meaning of the different types of labels raises (Langer et al. 2008). Due to the beforementioned reasons consumers may develop mistrust of single labels. A partitioned price labelling scheme, which identifies the sustainability price component, would create a higher level of transparency and information security at lower search costs. Building on the low-cost hypothesis (Diekmann and Preisendörfer 2003), it can be concluded that with lower search costs the likelihood to choose the sustainable option increases, keeping the benefits derived from the sustainable product option constant. Arguably, if either the sustainability characteristics or the price mark-up are not disclosed, consumers are not fully informed. Hence, reporting either sustainability measures or price mark-ups in isolation can sufficiently reduce the search costs and establish the transparency required for a higher willingness to buy on behalf of the consumer. Consumers would either face a situation in Reimers/Hoffmann, Transparent Price Labelling for Sustainable Products MARKETING · ZFP · Volume 41 · 2/2019 · p. 21–36 23 Price level Price labelling scheme Sustainability information WTB GWTP H1 H2 H3 H4 Notes: GWTP = general willingness to pay, WTB = willingness to buy. Fig 1: Proposed model which they have a clear added value, but vague price information or a situation where they have price clarity, but uncertainty about what the price is paid for. Therefore, we expect that the combination of the two measures gives rise to an additional increase in the willingness to buy: H2: The effect of the sustainability information is amplified by the price labelling scheme: Consumers are most likely to purchase a sustainable product at a given price, if the product labelling specifies both the sustainability characteristics and the price mark-up. 2.5. Moderating Role of the Level of Price Mark-up The low-cost-hypothesis claims that the effects of consumers’ environmental consciousness on their environmental behaviour are highest when the subjective direct or indirect costs are low (Diekmann and Preisendörfer 2003). In a similar vein, consumers will only accept labelled products if the price mark-up for sustainability is at a reasonable level in relation to the base price of the mainstream counterparts. Past research supports this assumption, showing that consumers usually only accept the price premiums of moderate size. For example, the metaanalysis of Tully and Winer (2014) found a mean increase of the willingness to pay for sustainable products of 16.8 % across different product categories. Nevertheless, accepted price premiums range considerably across studies, countries, product categories and consumer segments (Andorfer and Liebe 2012; Didier and Lucie 2008; Paetz and Guhl 2017; Poelmans and Rousseau 2016; Yu et al. 2014). Until now, conventional price labelling schemes do not define which share of a price the consumers have to pay for the product and which share they have to pay to ensure the sustainability component. A transparent price labelling scheme that unbundles the price for both product components attracts attention to the price mark-up for sustainability (Bertini and Wathieu 2008). A high price mark-up (compared to base price) can potentially backfire (Shen et al. 2007) because consumers realize that the sustainable option comes at high monetary costs, whereas conventional price labelling schemes hide the premium charged for such product components. Therefore, we hypothesize that product labelling, which specifies both the price mark-up and the sustainability characteristics, performs better for low rather than for high price markups. H3: At a low price mark-up, consumers are more willing to buy a sustainable product, if the price mark-up is transparent and sustainability information are provided, while at a high price mark-up a conventional approach leads to a higher willingness to buy. 2.6. General Willingness to Pay as a Boundary Condition We expect that consumers’ willingness to accept higher costs for sustainable options and to buy these options further depends on the general willingness to pay (GWTP) for products in this product category. If the GWTP is high, price mark-ups for the sustainability-option will be considered as subjectively less costly than if the GWTP is low. If there was no GWTP a product at a certain price, consumers wouldn’t even consider the sustainable option. Thus, product labelling which includes the properties listed in H3 only works for consumers whose GWTP exceeds the basic price of the conventional counterparts. Therefore, we further assume that: H4: The three-way-interaction, as postulated in H3, only occurs if the GWTP is higher or equal than the basic price of the conventional counterpart of the sustainable product. Summarizing our hypotheses, we assume that the effect of the sustainability information given is conditional on the price labelling scheme. This interaction effect is, in turn, conditional on the price level. Consumers’ GWTP serves as another boundary condition. The proposed model is visualized in Fig. 1. Reimers/Hoffmann, Transparent Price Labelling for Sustainable Products 24 MARKETING · ZFP · Volume 41 · 2/2019 · p. 21–36 3. Method 3.1. Object of Investigation We run the present study in the field of the clothing industry for the following reasons. Contributing a share of four percent on global total merchandise trade exports in 2017 (WTO 2018) the clothing and textile industry is not only of high economic interest, but also relevant with respect to its environmental and social footprint. The clothing industry currently attracts public attention due to the disregard of environmental impacts (e. g., excessive use of chemical and natural resources, GHG emissions, air and water pollution) and ethical standards (e. g., poor wages, long working hours, worker’s right) in all stages of a products life cycle (Madsen et al. 2007; Boström and Micheletti 2016). Accordingly, it is not surprising that a large amount of eco- and social labels in clothing industry have been established. The effectivity of these labels has already been discussed in the literature. A higher WTP due to eco-labels can be found for environmentally certified clothing (Goswami 2008), organic cotton in sportswear (Casadesus-Masanell et al. 2009) or socially responsible T-shirt options (organic cotton, sustainable cotton, and US-grown cotton shirts; Ha-Brookshire and Norum 2011; Ellis et al. 2012). Providing information about ethical standards can increase consumers’ willingness to accept price premiums for athletic socks (Prasad et al. 2004) and T-shirts (Elliot and Freeman 2001; Trudel and Cotte 2009) made under good working conditions or ethical attributes (no child labor used, minimum wage paid, no dangerous working conditions, acceptable living standards) of athletic shoes (Auger et al. 2003). With that knowledge in mind we used a simple, white T-shirt as our test object; it is an everyday object that has clearly defined and well-known properties, and during its life cycle all sustainability factors are of potential concern. While the effect of sustainable labels on consumers WTP has been widely investigated, to best of our knowledge, no study so far has combined theory on price partitioning and sustainability labelling. Tab. 1 lists the most relevant empirical research contributing to our research that considers effects of sustainability labelling on consumers WTP for T-shirts or price partitioning. Accordingly, depending on the base price for conventional T-shirts, consumers are willing to accept price premiums between 15 %-62 % for sustainable product characteristics. 3.2. Pre-test 1: Development of the Manipulation A pre-test was conducted for two reasons. First, to identify important sustainability characteristics influencing consumers’ purchase decision in our field of investigation. Second, it was used to specify realistic price ranges of consumers’ willingness to pay for a sustainable Tshirt. We constructed an online-survey to ask 30 subjects about which price premium (in %) they would additionally pay, compared to a simple, white T-shirt with a base price of 9.99 EUR, for a T-shirt being ecologically, socially and economically sustainably produced. These dimensions are taken from the triple bottom line concept (Elkington 2013). In our pre-test sample 60 % are male, the mean age is 31.4 (SD = 10.3) and 43.3 % have a university degree. The participants exhibit different levels of income (up to 500 EUR: 3.3 %; 501 EUR to 1,000 EUR: 20.0 %; 1,001 EUR to 1,500 EUR: 20.0 %; 1,501 EUR to 2,000 EUR: 16.7 %; 2,001 EUR to 3,000 EUR: 16.7 %; 3,001 EUR to 4,000 EUR: 3.3 %; and more than 4,000 EUR: 16.7 %). Based on the frequencies of the stated price premiums, consumers’ WTP for sustainable products is more pronounced for social and ecological characteristics (Fig. A1 in the appendix). Thus, 39.9 % (43.3 %) of the respondents would pay mark-ups of max. 50 % for ecological (social) sustainability. With regard to the examination of the hypotheses, price ranges of 20 % to 50 % appear reasonable. For our further label specification, we consider a low price mark-up (approx. 30 %) and a high price mark-up (approx. 50 %), and we refer the label’s sustainability information to environmental and social impacts. The willingness to pay decreases significantly with a mark-up greater than 50 %, with the result that only 30.0 % (23.3 %) of the respondents would pay a higher price premium for ecological (social) features. Validating our thresholds, we found strong gaps between 30 % and 35 % price-mark-up as well as between 50 % and 55 %. Further, a price mark-up of 30 % seems more appropriate than 20 % or 25 % for sustainable clothes for at least two reasons. First, according to previous research, which considers equal or comparable base prices for conventional T-shirts (for an overview please refer to Tab. 1) consumers accept price premiums for sustainable T-shirts within a range between 25 % and 62 % (Elliot and Freeman 2001; Ellis et al. 2012 and Levinson 2010). Second, odd price endings at .99 are widely used in German markets. Thus, in our case, price mark-ups of 25 % (leading to a price of 12.49 EUR) may seem unrealistic and increase the possibility of biased results. 3.3. Design Based on the pre-test results, a 2 (sustainability information) × 2 (price labelling scheme) × 2 (price level) between-subjects design was used in which subjects were randomly assigned to one of the eight treatments. The respondents were exposed to an advertisement showing a simple, white and sustainably produced T-shirt. To exclude gender effects, we provided a gender-specific treatment. Therefore, prior to the actual experiment, we asked for participants’ gender to ensure correct assignment of the advertisements. We kept the advertisement as simple as possible and used standardized treatments to reduce response biases (Spilski et al. 2018). We further added free shipping to ensure that respondents’ purchase decisions are not influenced by additional potential costs. Depending on the combination of factor levels, each ad- Reimers/Hoffmann, Transparent Price Labelling for Sustainable Products MARKETING · ZFP · Volume 41 · 2/2019 · p. 21–36 25 R es ea rc h S tr ea m S tu d y P ro d u ct M a in f in d in g s th a t co n tr ib u te t o o u r re se a rc h S L E L P P E ll io t an d F re em an (2 0 0 1 ) T -s h ir ts C o n su m er s ar e w il li n g t o p ay a p ri ce m ar k -u p o f 2 8 % ( 1 5 % ) fo r a 1 0 U S D ( 1 0 0 U S D ) T -s h ir t m ad e u n d er g o o d c o n d it io n s. E ll is e t al . (2 0 1 2 ) T -s h ir ts O n a v e ra g e , c o n su m e rs w o u ld a c c e p t a p ri c e m a rk -u p o f 2 5 % f o r a n o rg a n ic c o tt o n T -s h ir t. C as ad es u s- M as an el l et a l. ( 2 0 0 9 ) F la n n el s h ir t (c o tt o n s p o rt sw ea r) O n a v er ag e, c u st o m er s ar e w il li n g t o p ay 6 .5 8 U S D m o re f o r a T -s h ir t m ad e o f o rg an ic c o tt o n t h an t h e m ai n st re am c o u n te rp ar t. H a- B ro o k sh ir e an d N o ru m ( 2 0 1 1 ) C o tt o n a n d T -s h ir ts O n a v er ag e, m o re t h a n h a lf o f th e r es p o n d en ts a re w il li n g t o p ay a p ri ce m ar k -u p s o f 5 .5 9 U S D f o r a n o rg a n ic c o tt o n s h ir t, 5 .5 4 U S D f o r a s u st a in a b le c o tt o n sh ir t a n d 5 .1 9 U S D fo r a c o tt o n sh ir t m a d e o u t o f 1 0 0 p e r c e n t U S -g ro w n c o tt o n a t th e 3 0 .0 0 U S D re ta il v al u e. S u st a in a b il it y L a b el li n g L ev in so n ( 2 0 1 0 ) T o p /T -s h ir ts 5 0 % o f th e re sp o n d en ts w o u ld a cc ep t p ri ce m ar k -u p s o f 4 6 % ( 5 2 % , 5 4 % a n d 6 2 % ) fo r lo w w at er u se ( cl im at en eu tr al , co n tr o l fo r ch em ic al a n d o rg an ic c o tt o n ) fo r a 1 0 0 S K t o p /T -s h ir t. B er ti n i an d W at h ie u (2 0 0 8 ) F li g h t, O n li n e g ro ce ry s h o p p in g , M o v ie t ic k et C h ri st m as t re e P P c re at es h ig h er a tt en ti o n t o s ec o n d ar y a tt ri b u te s an d r el at ed p ri ce c o m p o n en ts co m p ar ed t o a ll -i n cl u si v e la b el li n g s ch em es . C h ee m a (2 0 0 8 ) D V D , C el l p h o n e se rv ic e, sc ar f, L C D c o m p u te r m o n it o r P P i n cr ea se s th e am o u n t o f at te n ti o n p ai d t o s u rc h ar g e fo r lo w -r ep u ta ti o n s el le rs . P P lo w er s p u rc h as e in te n ti o n w h en se ll er re p u ta ti o n is l o w , fo r h ig h -r ep u ta ti o n se ll er s, t h er e is n o s ig n if ic an t d if fe re n ce b et w ee n e ff ec ts o f P P o r co n so li d at ed p ri ce f o rm at o n p u rc h as e in te n ti o n . V ö lc k n er e t al . (2 0 1 2 ) W in e b o tt le s P P b o o st s p o si ti v e in fo rm at io n al e ff ec t o f p ri ce , w h il e th e n eg at iv e sa cr if ic e ef fe ct o f p ri ce b ec o m es m o re n eg at iv e. P o si ti v e ef fe ct s o f P P o n co n su m er d em an d d ep en d s o n t h e re la ti o n o f b o th e ff ec ts . P ri ce P a rt it io n in g S h en g e t al . (2 0 0 7 ) C D w al k m an , D ig it al w at ch P P le ad s to h ig h er p u rc h as e in te n ti o n , w h en s u rc h ar g e is r el at iv el y l o w a n d i n lo w er p u rc h as e in te n ti o n , w h en su rc h ar g e is re la ti v el y h ig h (c o m p ar ed to b as e p ri ce ). S u st a in a b il it y L a b el li n g & P ri ce P a rt it io n in g T h is S tu d y T -s h ir ts U si n g a tr an sp ar en t p ri ce la b el li n g sc h em e ad d it io n al ly ra is es th e ef fe ct o f su st ai n ab il it y i n fo rm at io n i f co n su m er s’ g en er al w il li n g n es s to p ay f o r th e p ro d u ct ex ce ed s th e b as e p ri ce o f th e m ai n st re am c o u n te rp ar t an d i f o n ly m o d er at e le v el s o f p ri ce m ar k -u p s ar e u se d ( 3 0 % ). N o te s: P P = p ri ce p ar ti ti o n in g ; S L = s o ci al -l ab el li n g ; E L = e co -l ab el li n g . T ab .1 : Se le ct ed re le va nt em pi ri ca lr es ea rc h th at co ns id er s su st ai na bi li ty la be ll in g or pr ic e pa rt it io ni ng . Reimers/Hoffmann, Transparent Price Labelling for Sustainable Products 26 MARKETING · ZFP · Volume 41 · 2/2019 · p. 21–36 vertisement contains a particular specification with regard to sustainability information, price labelling scheme, and price level. The first factor, sustainability information, includes whether the T-shirt is only declared as a sustainable T-shirt without additional information or whether additional information on the sustainability of the T-shirt is given. As the pre-test clarifies that ecological and social components are perceived as equally important, both components are taken into account. After a comparison of various suppliers of sustainable clothing, the following information are used: No child or forced labour, compliance with minimum wages and occupational safety, 100 % organic cotton and no use of chemicals causing environmental problems or damage to health. The second factor, price labelling scheme, implies either a conventional price labelling scheme of the total price (e.g., 12.99 EUR) or a transparent price labelling scheme. The transparent labelling scheme explicitly showed the price mark-up for sustainability (e.g., 2.99 EUR) separately in addition to the conventional price (9.99 EUR). The third factor, price level, contrasts a low price markup of 30 %, which resulted in a combined price of 12.99 EUR, with a high price mark-up of 50 %, which resulted in a combined price of 14.99 EUR. These two levels were derived from the results of the pre-test. As a validation of the price mark-up thresholds, we additionally applied the van Westendorp (1976)-technique, asking consumers at which price level they would evaluate the Tshirt as being (1) too cheap, (2) cheap, (3) expensive, (4) too expensive. The acceptable price range (point of marginal cheapness: PMC = 8.00 EUR, point of marginal expensiveness: PME = 19.50 - 20.00 EUR) includes all prices of our treatment. The optimal price point of OPP = 10.00 EUR is similar to our basic price, the indifference price point of IPP = 14.50 - 15.00 EUR is close to our upper threshold and our lower threshold is located in between. An overview of the factorial design is given in the appendix Fig. A3. 3.4. Pre-test 2: Test of the Manipulation We ran an additional pre-test (n = 69, 58 % female) to test the experimental manipulations of the price labelling scheme, the price level, and the sustainability information. Subjects were randomly assigned to one of the eight treatments. Using the same gender-specific advertisements as in the main study, both advertisements (for conventional and sustainable T-shirts) were presented simultaneously. We used seven-point single-item scales to measure respondents’ price perception, their evaluation of the T-shirt sustainability based on the information provided by the advertisement, trust and information security, as well as respondents’ perception of identifiability of the price mark-up for sustainability. To capture respondents’ price perception, they were asked to what extent they agree to the statement: “The sustainable T-shirt illustrated in the advertisement is expensive”. T-test results confirm that respondents consider a T-shirt with a high price mark-up as more expensive (M = 4.03) compared to one with a low price mark-up (M = 3.00, t(67) = -2.504, p e .05). We measured respondents’ evaluation of the sustainability (social and ecological sustainability) of the T-shirts with two items (”The T-shirt shown in the advertisement is socially sustainable.” and “The T-shirt shown in the advertisement is ecologically sustainable.”). Confirming the manipulation, T-shirts with additional information on social and ecological sustainability are perceived as more sustainable (Msoc= 5.37; Mecol = 5.73) than T-shirts without this information (Msoc = 4.64, t(67) = -3.213, p e .01; Mecol = 5.15, t(67) = -2,914, p e .01). Respondents’ trust in the sustainable information and information security are measured using the items: “The information provided by the advertisement about the sustainability of the T-shirt seems credible” and “I feel fully informed about the sustainability of the T-shirt”. The results confirm that additional sustainability information increases both trust (Mwith information = 4.87, Mno information = 3.28, t(67) = -5.469, p e .001) and information security (Mwith information = 3.77, Mno information = 1.74, t(67) = -6.537, p e .001). Finally, we measured respondent’s perception of identifiability of the price mark-up for sustainability with the item “The price mark-up for sustainability is immediately apparent”. A transparent price labelling scheme helps consumers to identify the price for sustainability (M = 4.53) compared to a conventional price labelling scheme (M = 2.64, t(67) = -4.491, p e .001). 3.5. Sample We collected data from 362 respondents based on an online experiment, which was shared via social media postings on Facebook during May to July 2017. All participants had the chance to win an Amazon gift card (2 x 25 EUR). In all, 52.7 % of the respondents are male. The mean age is 31.1 years (SD = 10.4) and almost half of the respondents (46.10 %) have a university degree. The participants exhibit different levels of income (up to 500 EUR: 13.0 %; 501 EUR to 1,000 EUR: 20.8 %; 1,001 EUR to 1,500 EUR: 14.7 %; 1,501 EUR to 2,000 EUR: 15.2 %; 2,001 EUR to 3,000 EUR: 15.2 %; 3,001 EUR to 4,000 EUR: 10.2 %; and more than 4,000 EUR: 10.2 %). 3.6. Measures Dependent variable. The willingness to buy (WTB) the sustainable option is used as the dependent variable in the main experiment. In the first part of the online experiment a fictional online shopping situation is presented. After being shown an advertisement of a conventional white T-shirt at the price of 9.99 EUR (Fig. A2 in the appendix), the test person is asked to consider that she/he just made a decision on buying this particular T-shirt. Reimers/Hoffmann, Transparent Price Labelling for Sustainable Products MARKETING · ZFP · Volume 41 · 2/2019 · p. 21–36 27 Subsequently, another advertisement is displayed showing the same T-shirt, but in contrast labelled as sustainably produced (depending on the specific treatment). Then, in order to measure the WTB, the test person is asked to rate on a seven-point Likert scale the following statement “If I were looking for a white T-shirt, I would opt for the sustainable product variant for X EUR” (M = 4.48, SD = 2.08). General willingness to pay (GWTP). Further, to measure the respondents GWTP for a simple white T-shirt, they were asked to complete the following sentence: “For a simple white T-shirt I usually pay...” (M = 10.83, SD = 4.93, min = 0, max = 39, share higher than 9.99 EUR = 69.34 %). Based on the GWTP we generated a dummy variable indicating GWTP for a simple white T-shirt (GWTP & 10 EUR, 0 = no, 1 = yes). Controls. We additionally measured a set for potential confounding variables. For this purpose, we rely on measurement scales that had already been applied in previous studies. The scales price consciousness and brand consciousness are based on a study by Sproles and Kendall (1986). To capture price consciousness, the respondents were asked to evaluate to what extent they agree or disagree with the statement: “I buy as much as possible at sale prices” (M = 4.49, SD = 1.53). Brand consciousness was measured using two items: “The well-known national brands are best for me”, “The higher the price of a product, the better its quality” (M = 3.51, SD = 1.78, α = .73). We measured product involvement with four items: “I need white T-shirts”, “I often wear white T-shirts”, “I own white T-shirts”, “I like to wear white T-shirts” (M = 4.45, SD = 1.78, α = .94). All aforementioned items were measured on seven-point-rating scales, which were initially anchored from -3 to +3 in the online experiment and then transferred to 1 to 7 for analytical purposes. Moreover, we added socio-demographic dummy variables, including gender, age, level of household income and education status. The validity of the multi-item constructs was tested by performing an exploratory factor analysis with varimaxrotation for all multi-item constructs and the corresponding items. The expected multi-factorial structure was confirmed and all items had high loadings on their related factor. Further, we verified the unidimensional structure of each construct by a separate exploratory factor analysis. The share of explained variance of all factors was between 60 % and 90 %. 4. Results 4.1. Hypotheses Testing First, we ran a three-way ANOVA to disentangle the effects of the sustainability information, the price labelling scheme, and the price level as well as their interaction effects on WTB. In line with hypothesis H1, the effect of sustainability information on respondents’ WTB is positive and statistically significant (Mwith information = 4.90, Mno information = 4.02; F(1, 354) = 18.660, p e .001, η 2 = .050). We found no significant interaction effects between sustainability information and price labelling scheme (F(1, 354) = .847, ns), sustainability information and price level (F(1, 354) = 2.318, ns), price labelling scheme and price level (F(1, 354) = 1.508, ns), and between sustainability information, price labelling scheme, and price level (F(1, 354) = 1.121, ns). Accordingly, with this global analysis, H2 could not be confirmed. In the next step, we split the sample into two distinct groups, differentiating entities with regard to the price level charged for a sustainable T-shirt to test H3. We estimated a two-way ANOVA to compare the effects of the sustainability information and the price labelling scheme on WTB for each group separately (Tab. 2). To test H4, we included a dummy variable indicating if the consumers’ WTP for a conventional produced T-shirt was at least equal or higher than the basic price (GWTP). In the low price mark-up group, the advertisement containing sustainability information significantly increases the WTB in comparison to an advertisement without information (Mwith information = 4.91, Mno information = 4.30; F(1, 185) = 4.435, p e .05, η 2 = .024). In contrast to the results discussed before, we find a marginally significant interaction between sustainability information and the price labelling scheme (F(1, 185) = 3.692, p e .10, η 2 = .020; Tab. 1). Hence, the analysis supports hypothesis H2 for the low price mark-up group. In the high price markup group, the advertisement containing sustainability information significantly increases the WTB in comparison to an advertisement without information (Mwith information = 4.90, Mno information = 3.66; F(1, 169) = 13.517, p e .001, η 2 = .074). However, the interaction between sustainability information and a mark-up on the WTB was not statistically significant (F(1, 169) = .009, ns) in this group. Means are visualized in Fig. 2 (upper panel). To test hypothesis H4, we excluded the respondents, whose GWTP for a T-shirt was lower than the basic price. Two-way ANOVAs confirmed the previous results for the interaction effects for both the group with the low price mark-up (F(1, 130) = 3.261, p e .10, η 2 = .025) and the group with the high price mark-up (F(1, 116) = .565, ns). Means are visualized in Fig. 2 (lower panel). As expected, the interaction effect is more pronounced in the low price mark-up condition (H3), and we therefore explored this group in more detail. An OLS regression analysis with the predictors sustainability information, price labelling scheme, GWTP and their interactions confirm a statistically significant three-way interaction (β = .084, t(181) = 2.659, p e .01) within the group with a low price mark-up. To further qualify this interaction effect, we performed a floodlight analysis (Spiller et al. 2013) for the low price mark-up group (Process model 3; Hayes 2017), using the metric scale and thus the full information of the GWTP. With this model, we test how the GWTP for a simple, white T-shirt and the factor price Reimers/Hoffmann, Transparent Price Labelling for Sustainable Products 28 MARKETING · ZFP · Volume 41 · 2/2019 · p. 21–36 Total sample yesno 6.0 5.5 5.0 4.5 4.0 3.5 3.0 yesno 6.0 5.5 5.0 4.5 4.0 3.5 3.0 yesno 6.0 5.5 5.0 4.5 4.0 3.5 3.0 yesno 6.0 5.5 5.0 4.5 4.0 3.5 3.0 Low price mark-up High price mark-up W T B High GWTP conventional transparent Price labelling scheme Sustainability information Low pricea High priceb F 2 F 2 GWTP 25.752*** .123 13.109*** .072 Sustainability information 4.435* .024 13.517*** .074 Price labelling scheme 1.527 .008 7.231** .041 Sustainability information × price labelling scheme 3.692† .020 .009 .000 Notes: 2 = eta-squared, Level of significance: †p .10, *p .05, **p .01, ***p .001, DV: WTB. Low price: R² = .162 (R²adj. = .143). High price: R² = .179 (R² adj. = .159). b se t p LLCI ULCI constant 3.437 .366 9.397 2.715 4.158 Sustainability Information .418 .368 1.136 -.308 1.145 Price labelling schemes -.521 .367 -1.420 -1.245 .203 General willingness to pay (GWTP) .109 .031 3.489 *** .047 .017 Sustainability information × Price labelling schemes -.661 .369 -1.789 -1.389 .068 Price labelling scheme × GWTP .034 .031 1.077 -.028 .095 Sustainability information × GWTP -.006 .031 -.191 -.068 .056 Sustainability information × Price labelling schemes × GWTP .084 .031 2.659 ** .022 .146 Notes: Process (model 3), *p .05; **p .01; ***p .001, b = unstandardized regression coefficient, DV: WTB. Bootstrapping (CI 95 %, 5,000 samples): LLCI: lower limit, ULCI: upper limit. Only the group with low price mark-ups is considered. Fig. 2: Price labelling scheme × sustainability information interaction effect on WTB. Tab. 2: Two-way ANOVA, separately for low and high price mark-ups Tab. 3: Multiple regression on WTP with interactions. labelling scheme moderate the relationship between the sustainability information and the WTB (Tab. 3). We applied the Johnson-Neyman technique to identify significant ranges of GWTP for which the two-way interaction between sustainability information and price labelling scheme turns out to be significantly positive. The Johnson-Neyman region for p e .05 occurred above a value of 11.18, which was the case for 37.08 % of the participants (Tab. 4). Starting at this level of GWTP the interaction of sustainability information and price labelling exerts a positive effect on WTB, meaning that these Reimers/Hoffmann, Transparent Price Labelling for Sustainable Products MARKETING · ZFP · Volume 41 · 2/2019 · p. 21–36 29 conventional Low price mark-up M -S D 6.0 5.0 4.0 3.0 2.0 6.0 5.0 4.0 3.0 2.0 6.0 5.0 4.0 3.0 2.0 6.0 5.0 4.0 3.0 2.0 6.0 5.0 4.0 3.0 2.0 6.0 5.0 4.0 3.0 2.0 = -.393, p = .083 = -.028, p = .858 = -.337, p = .152 = -.123, p = .531 = .266, p = .054 = .654, p = .002 G W T P High price mark-up W T B Sustainability information M M + S D no no yesyes Price labelling scheme transparent Notes: Spotlight analysis, DV = willingness to buy (WTB). GWTP b se t p LLCI ULCI .000 -.661 .369 -1.789 -1.389 .068 3.000 -.410 .284 -1.443 -.970 .150 6.000 -.159 .206 -.769 -.565 .248 9.000 .092 .149 .619 -.202 .387 11.127 .270 .137 1.973 * .000 .541 13.500 .469 .159 2.942 ** .154 .783 16.500 .720 .223 3.228 *** .280 1.160 19.500 .971 .303 3.203 ** .373 1.569 22.500 1.222 .390 3.135 ** .453 1.991 25.500 1.473 .479 3.073 ** .527 2.418 Notes: Floodlight analysis. Process (model 3), *p .05; **p .01; ***p .001. The area of significant effects is shaded grey. Bootstrapping (CI-95 %, 5,000 samples): LLCI: lower limit, ULCI: upper limit. Fig. 3: Conditional effect of labelling scheme × sustainability information qualified by price level and GWTP. Tab. 4: Conditional effect of sustainability information × price labelling scheme on WTB at different levels of GWTP. two factors amplify their effect respectively. These relationships are visualized in Fig. 3, demonstrating that only for those respondents who are exposed to a low price mark-up and who have a high GWTP, there is a positive interaction of the sustainability information and the price labelling scheme. 4.2. Robustness We ran an ANCOVA to ensure the robustness of the results. This analysis controlled for age, gender, level of education, household income, brand consciousness, price consciousness, and product involvement. All effects reported above remained stable (Tab. 4). In the low price mark-up group, there was a marginally significant effect of sustainability information on WTB (F(1, 118) = 3.454 , p e .10, η 2 = .028). The analysis confirms the significant interaction between sustainability information and price labelling scheme (F(1, 118) = 4.403, p e .05, η 2 = .036). In the high price mark-up group, again, the advertisement containing sustainability information exerts a statistically significant effect on WTB (F(10, 108) = 5.891, p e .05, η 2 = .052). The interaction between sustainability information and the price mark-up on the WTB was not significant (F(1, 108) = .800, ns). 5. Discussion This paper introduced an innovative approach of labelling sustainable products, which includes the specific sustainability characteristics and a separate and explicit outline of the price mark-up for the sustainable option compared to the mainstream product. The experimental study confirms that providing detailed sustainability information increases consumers’ WTB unconditionally. Using a transparent labelling scheme further increases this effect if general willingness to pay for the product Reimers/Hoffmann, Transparent Price Labelling for Sustainable Products 30 MARKETING · ZFP · Volume 41 · 2/2019 · p. 21–36 Low pricea High priceb F 2 F 2 Controls Age .492 .004 1.455 .013 Education 1.220 .010 .163 .002 Income 1.216 .000 .282 .003 Gender .003 .000 1.540 .014 Brand conscious 7.900** .063 1.257 .012 Product involvement .220 .002 .002 .000 Price conscious 10.487** .082 3.206† .029 Labelling effects Sustainability information 3.454† .028 5.891* .052 Price labelling scheme .225 .002 6.698* .058 Sustainability information × price labelling scheme 4.403* .036 .800 .007 Notes: 2 = eta-squared. Level of significance: †p .10. *p .05. **p .01, DV: WTB, gender (0: female, 1: male), age (0: 40 years, 1: > 40 years), household income (0: 1000 EUR, 1: >1000). education status (0: no university degree, 1: university degree). Low-price: R² = .174 (R²adj. = .104). High price: R² = .173 (R²adj. = .086). Tab. 5: ANCOVA with controls as robustness check. exceeds the base price of the mainstream counterpart and if only moderate levels of price mark-ups are used. Our model introduced a series of moderating conditions that marketers need to address. Choosing the most effective way to promote sustainable products is no simple yes or no answer, but rather a contingency approach. Our study contributes to the literature in several ways. Firstly, it complements the literature on sustainability labelling, which so far focused on sustainability information (Banerjee and Solomon 2003; Heinzle and Wüstenhagen 2012), by showing that adding transparent price information is a reasonable way to improve the product label efficacy. We conclude that the information asymmetry across companies and consumers has to be reduced on multiple dimensions, including the price information. The combined labelling of sustainability and price mark-ups reduces search costs and, in line with the low-cost-hypothesis, increases the consumers’ willingness to buy sustainable products. Secondly, the present study contributes to the literature on the effect of sustainability labelling on WTP. This literature has already proven that the price premium consumers are willing to pay largely depends on context factors, such as the sustainability dimensions (e. g., ecological, social), the consumers’ national culture, the price level of the mainstream product, and the product category (e. g., Andorfer and Liebe 2012; De Pelsmacker et al. 2005; Didier and Lucie 2008; Elliot and Freemann 2001; Krystallis and Chryssohoidis 2005; Poelmans and Rousseau 2016; Tully and Winer 2014; Yu et al. 2014). The present study shows that the level of the price mark-up has not only a direct effect on the consumers’ willingness to buy. It also works as a context factor, determining which extent of sustainability information and which type of the price labelling scheme is most effective. Thirdly, our study demonstrates that there are inter-individual differences in the general willingness to pay for products in a product category. The GWTP also works as a context factor that qualifies the effectiveness of sustainability information and price labelling schemes. Fourthly, our study extends the literature on price partitioning. So far, the meta-analysis of Abraham and Hamilton (2018) found that the positive effect of price partitioning depends on whether or not the total price is presented, whether individual components are typical for the product category and create benefits for the consumers, and whether the product category is considered as being hedonic or utilitarian. Remarkably, the meta-analysis also demonstrated a positive influence of the price level on the effectiveness of price partitioning. For the following reasons, consumers may respond more favourably to price partitioning with increasing price levels: Consumers might perceive the same absolute price markup as smaller at higher total price levels than at lower price levels. The present study, by contrast, considers different levels of the price-mark-up, keeping the basis price constant. In this case, a higher mark-up is less favourable, and consumers’ attention is directed to the second price component (the sustainability component). Here, the higher price level does not mask the higher mark-up, instead it highlights the mark-up, signalling higher monetary costs. Therefore, in our study, the conventional price labelling scheme led to a higher WTB in the high price level condition, while the price partitioning was more effective in the low price level condition. In sum, this study contributes to the literature on sustainable product labelling by showing that the questions of whether or not product labelling works or of how much consumers are willing to pay are ill-posed. The decision frame is more complex and boundary conditions should be considered. The present paper provides a conceptual model to treat these boundary conditions in a well-structured way. Reimers/Hoffmann, Transparent Price Labelling for Sustainable Products MARKETING · ZFP · Volume 41 · 2/2019 · p. 21–36 31 6. Implication This paper provides several implications for practitioners on how to design and to use sustainability product labelling effectively. First of all, the paper outlines the explicit labelling of the price mark-up as a new and effective way to reduce information asymmetries and consumers’ search costs. Secondly, the results of this paper help marketers to determine whether or not they should promote their sustainable products with sustainability information and with explicit labelling of price mark-ups. Whereas additional sustainability information increases consumers’ willingness to buy unconditionally, the additional positive effect of using a transparent labelling scheme is limited to boundary conditions. Fig. 3 provides an empirically established overview of the conditions that need to be addressed when designing product labels. Remarkably, the decision is to be based on a mix of the pricing politics, the marketing communication and the attributes of the target consumers. Fig. 3 illustrates that if the level of the price mark-up is too high (the three graphs on the left-hand side of Fig. 3), then the explicit disclosure of this mark-up is not advisable and a bundling of the basic and sustainable price is more effective. However, if the price mark-up is in a reasonable range (the three graphs on the right-hand side of Fig. 3), then an unbundling and explicit, transparent communication of the price mark-up could be advisable. Yet, marketers should apply this method only if the general willingness to pay of the consumer is sufficiently high (lower panels in Fig. 3). If they adopt a transparent price communication they should combine it with sustainability information. 7. Limitation and Future Research This study identifies the major boundary conditions that should be considered when providing sustainability information and designing price labelling schemes. This paper is a starting point for more research in this field. There are also some limitations that should be addressed in future studies. With the intention to avoid biases, and because the experimental manipulation depends on objective facts and has been established in a pre-test, the main study did not contain manipulation checks (Geuens and De Pelsmacker 2017; Splilski et al. 2018). To doubtlessly ensure that the manipulation works as intended, we call for future studies to replicate our findings, including these tests. Beyond the named variables, conceptual replications in future research should explore additional factors that determine whether or not a transparent price labelling scheme is effective. More knowledge on the generalizability and external validity is needed. In future experiments, the sustainability labelling could be explicitly split into the ecological and the social subdimensions, which could be studied independently and crossed. Moreover, the consumers’ general attitude towards sustainable consumption and their attitude towards corporate social responsibility might further moderate the effects found in this study. This study used sustainable textiles as object of investigations. Future research should analyse and compare different product categories, such as consumer electronics or food products, which are also frequently labelled as being sustainable. The price level of the investigated products should also be modified (e. g., luxury products vs. FCMG). Conspicuous consumption should be compared to private consumption. Further, our results indicate that the effect of price partitioning on consumers’ WTB sustainable products turns positive for low price mark-ups (keeping the base price constant). Accordingly, further research may analyse whether an even lower price mark-up of 20 % or 25 % would result in an additional boost of the effect of price partitioning on consumers’ WTB. In a similar vein, future research should consider crossnational differences. The present study was run in Germany and the drivers of sustainable consumption decision as well as consumers’ responses to the experimental treatment may vary cross-nationally. A global study of the Nilsen company (2014) with 30,000 respondents confirmed that 55 % of the consumers are willing to pay more for sustainable products and services, and 52 % check for sustainability information on the product. Remarkably, in this study, the self-reported WTP of European and North-American respondents is relatively low compared to the one of respondents from Asia-Pacific, Latin America, and Middle East/Africa, while the percentage increase in actual sales rates in Europe is of a similar magnitude compared to other regions. Despite of the high consumers’ awareness and general WTP of consumers across different countries, there is a broad international consensus on the need for a boost of sustainable consumption patterns as the actions are still not sufficient (Thøgersen 2010). Several studies provided explanations for cross-national differences, including different motives for sustainable behaviours (Minton et al. 2010), macro and structural causes of consumer purchases of organic food products (Thøgersen 2010), and cultural values, which are the basis for consumers’ consciousness for environmental and social challenges (Deng et al. 2006; Milfont et al. 2006; Soyez et al. 2009). We call for future cross-national validations and extensions of our model that control for these factors. This study has applied an experimental approach. Future studies may provide additional evidence using field experiments or scanner data of real purchases. Finally, we empirically confirmed that the impact of additional sustainability information on WTB will be amplified by a transparent price labelling scheme that specifies the price mark-up for the sustainability characteristics. We suggest that this effect occurs because additional sustainability information and the transparent price labelling scheme will positively influence information security and the consumers’ trust towards the product, which ultimately affects the WTB. We call for further research that explicitly tests the mediation effect of these two variables. Reimers/Hoffmann, Transparent Price Labelling for Sustainable Products 32 MARKETING · ZFP · Volume 41 · 2/2019 · p. 21–36 Baseline conditions M en W o m en Appendix Fig. A1: Additional WTP (in % on base price) for different sustainability characteristics. Fig. A2: Baseline conditions. Reimers/Hoffmann, Transparent Price Labelling for Sustainable Products MARKETING · ZFP · Volume 41 · 2/2019 · p. 21–36 33 Conventional price labelling scheme Transparent price labelling scheme M en W it h o u t su st a in a b il it y in fo rm a ti o n H ig h p ri ce m a rk -u p L o w p ri ce m a rk -u p W it h su st a in a b il it y i n fo rm a ti o n H ig h p ri ce m a rk -u p L o w p ri ce m a rk -u p W o m en W it h o u t su st a in a b il it y in fo rm a ti o n H ig h p ri ce m a rk -u p L o w p ri ce m a rk -u p W it h su st a in a b il it y i n fo rm a ti o n H ig h p ri ce m a rk -u p L o w p ri ce m a rk -u p Fig. A3: Factorial design of the experimental treatment. Reimers/Hoffmann, Transparent Price Labelling for Sustainable Products 34 MARKETING · ZFP · Volume 41 · 2/2019 · p. 21–36 References Abraham, A. T. & Hamilton, R. W. (2018). When Does Partitioned Price Lead to More Favorable Consumer Preferences? Meta-Analytic Evidence, Journal of Marketing Research (forthcoming). 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Abstract

Although past research confirmed that consumers are aware of the ecological and social implications associated with their own consumption choices, studies have frequently observed a discrepancy between attitude and actual behaviour. This discrepancy, often entitled as the attitude-behaviour-gap, can be partly explained by the lack of sustainability information and trust deficits. In this context, product labelling is considered a useful approach to foster sustainable consumption behaviour. However, consumers often distrust products with sustainability labels. This distrust may arise because consumers lack information about whether or not price mark-ups are warrantable. Arguably, the general lack of transparency regarding pricing (or individual price components) of sustainable products creates uncertainty, and hence, reduces consumers’ willingness to pay a significantly higher price for the postulated sustainability characteristics. Moreover, conventional labels are characterized by aggregated information and symbols, which the consumer can fluently process and easily understand. However, individually relevant information, which is crucial in a specific buying situation, might be lost. To overcome these obstacles, the paper marries the literature on sustainability labelling and price partitioning and investigates the effectiveness of an alternative labelling approach. This labelling approach specifies both the sustainability measures and price component consumers must pay for sustainability. Such kind of price-transparent sustainability labelling could reduce information asymmetries, and thus create information security. The paper reports a 2 (sustainability information) × 2 (price labelling scheme) × 2 (price level) experimental between subjects design. In sum, 362 respondents participated in the study, which was conducted in the field of the clothing industry using a simple, white T-shirt as test object. Sustainability is currently a relevant topic in the clothing industry with regard to environmental impacts (e. g., excessive use of chemical and natural resources, GHG emissions, air and water pollution) and ethical standards (e. g., poor wages, long working hours, worker’s right) in all stages of a products life cycle. Firstly, a pre-test identified important sustainability characteristics, which influence consumers’ purchase decision for T-shirts. The pre-test also specifies price ranges of consumers’ willingness to pay for a sustainable T-shirt. A second pre-test confirms the manipulation of all three experimental factors. The main study then confirms that providing detailed sustainability information increases the consumers’ WTB unconditionally. Using a transparent price labelling scheme additionally raises the effect of sustainability information if general willingness to pay for the product exceeds the base price of the mainstream counterpart and if only moderate levels of price mark-ups are used. The conceptual model confirmed in this study outlines a series of moderating conditions, which managers should consider when deciding on the price and communication politics of their sustainable products. Hence, choosing the most effective way to promote sustainable products is no simple yes or no answer, but rather a contingency approach. Based on this approach, the paper guides marketers in their endeavour to improve the sustainability labelling.

References

Abstract

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